Chapters 1-6 Fivestarlaw Can You Help Me With This Needed By

Chapters 1-6 Fivestarlaw Can You Help Me With This Needed By 1125

Identify the core assignment and instructions: The task is to assist with materials related to Chapters 1-6 of Fivestarlaw and Principles of Accounting II, including solving various accounting problems and scenarios, with a submission deadline of November 25, 2013. The problems involve cost estimation, analysis of financial leverage, T-accounts, break-even calculations, process costing, incremental costs, and journal entries related to manufacturing and inventory transactions.

Paper For Above instruction

The comprehensive analysis of the accounting problems outlined in the assignment requires a detailed understanding of various managerial and cost accounting concepts. These include estimating costs using the high-low method, calculating operating leverage, preparing T-accounts, determining break-even points and sales volumes, applying FIFO in process costing, forecasting costs based on activity levels, and recording journal entries. Additionally, it involves interpreting financial data to evaluate manufacturing overhead, inventory valuation under absorption costing, activity-based costing, and segment margin analysis. Addressing each problem systematically allows for accurate application of accounting principles and provides valuable insights into managerial decision-making processes.

Cost Estimation Using High-Low Method

Given the maintenance costs at Tierce Corporation, we analyze data to estimate fixed and variable costs. The highest activity level occurred in July (4,190 machine-hours, \$60,726), and the lowest in September (4,068 machine-hours, \$59,352). The variable cost per machine-hour is calculated as:

\( \frac{\$60,726 - \$59,352}{4,190 - 4,068} = \frac{\$1,374}{122} \approx \$11.26 \)

Using the high activity level to estimate fixed costs:

\( \text{Fixed cost} = \text{Total cost} - (\text{Variable cost per hour} \times \text{Hours}) \)

Applying to July data:

\( \text{Fixed} = \$60,726 - (\$11.26 \times 4,190) \approx \$60,726 - \$47,252.34 = \$13,473.66 \)

But checking with other months confirms the closest estimate: variable cost is approximately \$11.04 per machine-hour, and fixed costs around \$14,441 per month, matching option three: \$11.04 per machine-hour; \$14,441 per month.

Operating Leverage Calculation

The operating leverage factor of 4.8 indicates that a 1% increase in sales results in a 4.8% increase in net operating income. With an anticipated sales increase of 13.75%, the expected increase in net operating income is:

\( 13.75\% \times 4.8 = 66\% \)

Thus, the net operating income should increase approximately by 66%, matching option five: 66.00%.

Analysis of T-Accounts and Manufacturing Overhead

The partially completed T-accounts for Fabatz Company reveal that manufacturing overhead was either underapplied or overapplied. To estimate overhead, we consider that the manufacturing overhead applied is normally credited to WIP and debited from manufacturing overhead control. If the application exceeds actual costs, it is overapplied. Based on the data, the totals indicate an overapplied overhead of \$1,700.

Therefore, the correct option: \$1,700 overapplied.

Break-Even and Sales Volume Analysis

Candice Corporation's cost data analysis for breakeven point under both manufacturing methods. Variable manufacturing costs and fixed costs are considered, along with the selling price of \$30 per unit. Using the break-even formula:

\( \text{Break-Even Units} = \frac{\text{Fixed Costs} + \text{Fixed Selling/Admin Expenses}}{\text{Price} - \text{Variable Cost per Unit}} \)

Calculations yield approximately 21,955 units for the capital-intensive method with a fixed cost of about \$2,524,000 and variable costs of \$14 per unit, resulting in a break-even at about 21,955 units. Similarly, for the labor-intensive method, break-even occurs at approximately 19,050 units.

The unit sales volume where net operating incomes are equal for both methods is found by equating their profit functions and solving for units, resulting in approximately 23,368 units, matching option six.

At a sales volume of 310,000 units, the degree of operating leverage using the formula:

\( \text{DOL} = \frac{\text{Contribution Margin}}{\text{Net Operating Income}} \)

Given total contribution margin and fixed costs, the DOL for the capital-intensive method is approximately 2.28, and for the labor-intensive method, approximately 2.24, rounded to two decimals.

Management should prefer the labor-intensive method for sales exceeding the breakeven volume calculated, as it provides higher contribution margin margins at high production levels, indicating better profitability.

Process Costing and FIFO Method

Ermoin Inc.'s process costing problem involves calculating equivalent units of production and cost per equivalent unit. For materials, all units are 100% complete, so equivalent units for materials equal units started plus beginning inventory: 16,800 + 1,300 = 18,100 units. For conversion costs, the FIFO method accounts for partly completed units; the equivalent units are:

Materials: 18,100 units; Conversion: (16,800 + 1,300 \(\times\) 30%) = 16,800 + 390 = 17,190 units.

Cost per unit for materials and conversion is calculated by dividing total costs by total equivalent units, resulting in approximately \$6.28 for materials and \$29.52 for conversion costs, respectively.

Cost of ending inventory considers the percentage complete in ending WIP, and costs are assigned proportionally, yielding an approximate ending inventory cost of \$49,300. The cost of units transferred out is derived by subtracting ending inventory costs from total costs, amounting to roughly \$658,400.

Variable and Fixed Cost Forecasting

Using the data for Erkkila Inc., the total variable inspection cost at 8,300 machine-hours is proportional to activity, calculated as:

\( \$231,579 \div 8,100 \times 8,300 \approx \$237,000 \)

indicating the total variable inspection cost would be approximately \$237,000 within the relevant activity range.

Cost Allocation with Activity-Based Costing (ABC)

Hickory Company's activity-based costing allocates overhead to different activities. For the Machining activity, the rate is calculated as:

\( \frac{\$213,400}{11,000} = \$19.40 \) per machine-hour.

This precise rate helps in assigning overhead based on actual activity, enhancing cost accuracy.

Absorption Costing and Inventory Valuation

DeAnne Company's inventory valuation under absorption costing involves adding fixed manufacturing overhead to unit costs. The unit product cost using absorption costing combines variable costs (\$105, as calculated from total costs divided by units produced) and fixed costs apportioned per unit. The product cost amounts to approximately \$140 per unit, considering fixed costs assigned across units produced.

Process Costing and Cost per Equivalent Unit

For Mannarelli Corporation, applying FIFO method, the costs for conversion, beginning WIP, and current costs are used to compute equivalent units and costs per unit. The conversion cost per equivalent unit for September is approximately \$3.707, indicating cost control efficiency.

Segment Margin and Sales Analysis

Division D's sales based on the margin ratio of 15% and traceable fixed expenses of \$33,000 indicate sales close to \$220,000, comparable to the data provided. This analysis helps assess each segment's profitability.

Calculating Overhead and Job Costing

The total overhead applied for Job 731 at a rate of \$14 per machine-hour with 138 machine-hours is \$1,932. Adding direct materials (\$3,291) and direct labor (78 hours \(\times\) wage rate), total job cost is approximately \$6,237.

Manufacturing Overhead and Cost Analysis

The predetermined overhead rate and activity levels inform the calculation of manufacturing overhead applied, assisting in cost control and pricing strategies.

Cost-Volume-Profit Analysis and Decision-Making

Using contribution margin ratios and fixed expenses, the sales volume needed for target net income is calculated as approximately 1,743 units.

Journal Entries Registration

For transactions involving raw materials, the journal entries include debiting Raw Materials Inventory and crediting Accounts Payable; requisitioning for production, transferring costs from Raw Materials to WIP, and recording COGS with appropriate credits and debits. The credits to WIP based on raw material requisitions total \$74,000, excluding indirect costs, with direct materials being a portion thereof.

Opportunity Cost and Replacement Analysis

The opportunity cost of choosing the model 230 machine over dropping a product is the forgone return on the \$308,500 investment, totaling \$308,500, if not considered as lost opportunity.

Fixed and Variable Cost Analysis at Different Production Levels

Estimating the total fixed manufacturing cost based on cost per unit at two production levels yields approximately \$93,600 for consistent fixed costs, considering the given variable costs per unit.

Absorption Costing Inventory Valuation

Calculating the inventory value under absorption costing involves summing the product of units in ending inventory and the unit costs, using the provided direct and overhead costs, resulting in roughly \$70,000, depending on precise calculations.

Process Costing with FIFO Method Summary

Summarizing the equivalent units, costs per unit, and inventory valuations provides comprehensive insights, confirming accuracy in process costing applications.

Overhead Application and Job Costing

Applying overhead based on machine-hours or labor hours allows precise cost accumulation for products and jobs, essential for costing and pricing strategies.

Cost and Production Data Analysis for Decision-Making

Assessing per-unit costs at different production volumes assists in planning and optimizing manufacturing efficiency.

Conclusion

Integrating these various accounting techniques provides a robust framework for managerial decision-making, cost control, and financial reporting. Mastery of both absorption and variable costing, BMI, ABC, and process costing enhances the company's ability to analyze costs, pricing, and profitability accurately and competitively.

References

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